Articles Posted inPublic Policy Claims

In a partial victory for California workers, the State’s highest court ruled, in Salas v. Sierra Chemical Co. 59 Cal.4th 407 (2014) that employers cannot get away with violating California employment laws just because they find evidence, after being sued, that their mistreated employees did not have proper authorization to work in the United States.

Mr. Salas had worked for Sierra Chemical Company in California for a number of years when he injured his back on the job. The company had regular seasonal layoffs during the winter months and typically hired back its workers when business picked up in warmer months. However, after Mr. Salas injured his back on the job and filed a worker’s compensation claim, Sierra refused to hire him back until he could prove that he no longer needed an accommodation for his back injury. Mr. Salas filed a lawsuit against Sierra for unlawful employment discrimination and retaliation under the California Fair Employment and Housing Act, claiming that Sierra refused to accommodate his physical disability and refused to rehire him in retaliation for having filed a worker’s compensation claim.

Almost two years after refusing to rehire Mr. Salas, and just before the case was set to go to trial, Sierra found evidence that Mr. Salas had used someone else’s social security number when he applied for the job many years ago. The company argued that this information provided a complete justification for throwing his lawsuit out of court. Fortunately, the California Supreme Court disagreed, ruling that an employer cannot completely escape from liability just because it later finds evidence, after a lawsuit is filed, that the employee it discriminated against was undocumented. The Court explained that employers would otherwise have a powerful incentive to hire undocumented workers, or “look the other way” when hiring employees they suspect to be undocumented, because they would be able to violate any number of California’s employment laws (including minimum wage laws, child labor laws, and anti-discrimination laws) and get away with it if any of their undocumented employees ever sued to enforce the law.

In Thursday’s unanimous Lane v. Franks decision, the Supreme Court decided that public employees are protected from retaliation when they testify in court about misconduct they observe on the job. Lane v. Franks, 134 S.Ct. 2369 (2014).

Edward Lane was a director of a program for underprivileged youth operated by Central Alabama Community College (CACC). As the director, he conducted an audit of the program’s expenses and found that an Alabama State Representative, Susan Schmitz, was on the payroll even though she was not doing any work for the program! Mr. Lane terminated Ms. Schmitz’s employment and soon thereafter, Ms. Schmitz was indicted on mail fraud and theft charges. Mr. Lane testified against Ms. Schmitz about why he fired Ms. Schmitz and Ms. Schmitz was ultimately convicted.

After he testified, Mr. Lane, along with 28 other employees were terminated. But a few days later, CACC’s president Steve Franks hired back everyone other than Mr. Lane and one other employee. Mr. Lane filed a lawsuit claiming that Mr. Franks had violated his First Amendment rights by firing him in retaliation for testifying against Ms. Schmitz.

As Mr. Ventress learned the hard way – after three trips to the Ninth Circuit – it is tough to sue an airline for safety violations and/or termination for reporting safety violations.

Mr. Ventress claimed he was retaliated against as a flight engineer because he reported safety concerns. The case took three trips to the Ninth Circuit. In the first appeal, Ventress v. Japan Airlines (Ventress I) , 486 F. 3d 1111 (2007), the Ninth Circuit held that the Friendship Commerce and Navigation Treaty did not bar or preempt Mr. Ventress’ claims. In the second trip to the Ninth Circuit, it held that the Airline Deregulation Act did not bar or preempt Mr. Ventress’ claims. Ventress v. Japan Airlines (Ventress II), 603 F.3d. 676 (2010).

However, Mr. Ventress wasn’t so lucky on his third journey to the Ninth Circuit, which held that Mr. Ventress’ public policy/safety claims were barred by the Federal Aviation Act (FAA). The Court held that the claims would require the jury to decide safety questions that are governed by the FAA which occupies the field of aviation safety. Ventress v. Japan Airlines (Ventress III) 747 F.3d 716 (2014).

Mr. Wade brought a claim for wrongful termination in violation of public policy. His public policy claim was for race discrimination. Wade justified this outcome by noting the uniqueness of the Fair Employment and Housing Act‘s statutory scheme. That part, I generally understand, even if I don’t agree with it However, the Court didn’t stop there. It came up with a hard-to-follow and not so well- reasoned argument that Mr. Wade’s public policy against race discrimination was violated was encompassed in his union arbitrations and therefore precluded by it. The fact that his union arbitration didn’t in any way address race discrimination, didn’t stop the Court from its labored and illogical analysis that it did. So, be very careful of your labor arbitration’s impact on any civil case you might bring!

Dr. Jadwin sued his employer, Kern County, in federal court, for placing him on administrative leave in retaliation for his complaints about patient care and other violations. This underlying federal case subsequently resulted in a verdict of over $500,000.00 to Dr. Jadwin.

Instead of heeding the warning of being particularly careful not to retaliate, or appear to retaliate, against an employee with a pending claim, the County of Kern threw caution to the wind and sued Dr. Jadwin in state court, claiming that the good doctor filed a false claim for $3125 in expenses. Fresno’s claim against Dr. Jadwin was assigned to mandatory arbitration where Dr. Jadwin prevailed. After a variety of inappropriate maneuvering by the County, the State Court ruled that Fresno’s claim was frivolous and brought to harass Dr. Jadwin.

The Court of Appeals, in County of Kern v Jadwin (July 5, 2011) — C.A. 4th — –, 2011 WL 2611819, affirmed the finding by the trial court that the case was frivolous and upheld the trial court’s award of $50,000.00 in attorney’s fees. The Court of Appeals agreed with the lower court that the facts “‘paint a picture . . .’ of a lawsuit filed and maintained for the purpose of harassing Jadwin.”

Nicolas Tides and Matthew Neuman both worked for Boeing in the State of Washington and both were concerned that Boeing’s practices violated the Sarbanes-Oxley Act. The two employees complained internally, on multiple occasions, that they believed the system in place at Boeing permitted unauthorized users to alter the company’s internal controls rating system. Tides and Neuman, subsequently and independently, spoke to the press about their concerns, even though they were aware of a corporate policy prohibiting such conduct. Boeing fired both employees for unauthorized disclosures to the press. Both sued, claiming violations of Sarbanes-Oxley’s whistleblower protections pursuant to 18 U.S.C. Section 1514A(a)(1).

Unfortunately for both Mr. Tides and Mr. Neuman, 18 U.S.C. Section 1514A(a)(1) explicitly sets forth a list of the three entities or people to whom a whistleblower may report a perceived violation of the law for purposes of the Sarbanes-Oxley whistleblower protection statute, and none of these included the press. The court in Tides v The Boeing Co., — F.4th —- (9th Cir. May 3, 2011), sets forth the statutory protection as extended to 1. Federal regulatory or law enforcement agencies, 2. Congress, or 3. A supervisor. See 18 U.S.C. Section 1514A(a)(1). Thus, when Boeing brought a motion claiming that these employees’ actions were not protected under the Sarbanes-Oxley whistleblower section above, because they disclosed to the press, the Ninth Circuit agreed with Boeing.

There is some saving grace for those who face retaliation for making complaints of illegal practices in the State of California. First, learn from the mistakes above and complain to a specified person or entity under the statute. Second, if the wrongdoing violates other statutes, look at the possibility of using other statutory remedies. Third, if the wrongdoing violates the general public policy of the State of California, consider whether you might have a common law public policy claim. Lastly, if your claim is under Sarbanes-Oxley, consider using a different provision of the statute, such as 18 U.S.C. Section 1514A(a)(2). This provision protects employees who “file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed (with any knowledge of the employer) relating to an alleged violation of” parts of Sarbanes-Oxley. The Ninth Circuit in this case did not reach the question of whether there would have been a claim had the employees in the Tides case used that statutory provision.

By now this ought to be the accepted and undisputed black letter law: in the State of California, nothing good can come of a non-compete clause. A non-compete clause is generally illegal and in violation of the public policy set forth in California Government Code Section 16600. The reasoning is simple: the public policy of the State of California simply and unequivocally supports the rights of employees to seek work in their chosen profession or field. An employer’s general attempts to limit where an employee finds his or her next job, except for the employer’s legitimate interest in maintaining its confidential and proprietary information, is against public policy. An employer – who, under the “at will” laws of the same State of California, has the right to fire an employee “at will” (that is, for any reason that does not violate any specific law) – should not be permitted to prohibit an employee from finding new, gainful employment in his or her field. After all, fair is fair.

Therefore, it should come as no surprise that the court in Silguero v Creteguard, 187 Cal. App. 4th 60 (2010) held that a plaintiff stated a cause of action for violation of public policy where her current employer fired her because her past employer wrote a letter asking that her current employer assist in enforcing an illegal non-compete agreement prohibiting her from working in sales for 18 months after the termination of her employment. This is a simple, straight forward, public policy claim that should serve as a warning to employers to act cautiously regarding non-compete agreements – or better yet – just stay away from them.

The only question in the Silguero case is whether the employee should have also brought a claim against her past employer based on the letter it wrote, for violation of public policy and/or other tort claims such as intentional interference with contract or intentional interference with prospective economic advantage. After all, Silguero’s past employer really is as guilty a party as her current employer, as its actions caused her current employer to fire her. Let’s keep hoping that employers stay away from these non-compete agreements, and if they don’t, that the courts keep telling them to do so!